Is there any industry that still thrives amidst the pandemic, mortgage pressures, inflation and rising cost of living?

While setbacks and economic downturns affected almost all business areas during the pandemic, the luxury goods market has oddly been inflation-proof, being one of the fastest industries to bounce back in 2021 to pre-COVID-19 heights as the purchasing power of the consumer was strengthened by higher savings during lockdown.

Despite multiple price increases, a recent report by KPMG suggests that consumers are willing to pay the increased price, particularly in the younger demographic. Millennials’ purchase power is rising while Gen Zs value experiences over houses or savings, driving up impulse purchases and big ticket spending. In saying so, the impact of the current crises on their purchase behavior is yet to be seen.

Online luxury retail Cettire (ASX: CTT) is among those who managed to cash in and demonstrate exceptional operating momentum thanks to the shopping trend, with revenue growing at a faster rate than in H1 FY23. April in particular, was one of the strongest sales months with 160% increase in sales revenue. This brings the total sales revenue during the four-month period ending 30 April 2023 (unaudited) to $141.3 million, a 122% increase compared to the previous corresponding period (pcp), and a ten month total of $329m. This was a surprising result considering Q3 is traditionally regarded as a seasonal low for retailers.

This was translated into EBITDA of at least $7m on a delivered margin of greater than 20%, bringing the total adjusted EBITDA of at least $23.7m for the ten months into FY23. As of 30 April, the Company secured $39m net cash at bank, reflecting the settlement of trade payables from the seasonally larger December quarter.

Marketing investment (including brand investment) was a high single-digit percent of sales revenue, though the exact number was not revealed. 

Cettire’s Founder and CEO Dean Mintz commented, “It is particularly pleasing to see the Company’s localisation strategy is delivering results, with revenue from its emerging markets outpacing the Group.”

“Cettire is rapidly growing share in a large and growing global market, which benefits from the structural shift to online.”

Cettire’s strong performance can be attributed to further growth in repeat customer revenue and an acceleration in growth in active customers. Average order value year-to-date rose by 8% to $744 per order compared to $688 on pcp. Gross revenue from orders placed by returning customers year-to-date made up 59% of the total gross revenue, as opposed to only 51% on pcp. Cettire also managed to grow its customer base by 47% to approximately 350k customers within the first ten months of FY23 from approximately 246k customers within the same period last year.

In its FY22 results, the Company confirmed that Cettire would be operated to maximise profitable revenue growth during the remainder of FY23, whilst also self funding. Shareholders can expect Cettire’s full year performance result ending 30 June 2023 to be released in August 2023.